Assessing The Potential Impacts Of Trump's New Round Of Tariffs On Chinese Imports
STEVE INSKEEP, HOST:
China followed up on its promise to retaliate against the U.S. announcing new tariffs on $60 billion worth of American goods sold in China. Let's bring in David Wessel, who's been listening along with us. He leads the Hutchins Center for Fiscal and Monetary Policy at the Brookings Institution.
David, good morning.
DAVID WESSEL: Good morning.
INSKEEP: Navarro says no short-term pain here. We're imagining that. Is he right?
WESSEL: No, I think he's wrong. While the whole economy, all of us, may not suffer very much, if you happen to work in an industry that exports to China, if you work in an industry that depends on steel imports or aluminum imports, if you are a farmer, you're definitely going to feel the pain. And I'm surprised that Mr. Navarro isn't willing to say that the short-term pain is worth the long-term gain that he anticipates.
INSKEEP: And there's also a disagreement of fact in that interview because we had the gentleman from the U.S.-China Business Council say that if the United States were to stop buying so many TVs from China, there's just not enough production in the rest of the world to make up the difference. So we're just going to keep buying TVs from China in effect. But Navarro says, no, no, no, no. South Korea can step up. Vietnam can step up. Does that make sense?
WESSEL: It's very revealing. Peter Navarro and the president seem very focused on the bilateral trade balance between the U.S. and China. If I'm an American worker, what difference does it make to me if the stuff is made in China, Vietnam or South Korea? It seems to be very focused on this bilateral trade balance, which most economists think is irrelevant to our economy.
INSKEEP: But he does also say that he is hopeful that there would be some kind of new production over time in the United States. Is there room for American production of goods, like TVs, for example, to ramp up?
WESSEL: Well, I think it's unlikely that we're going to get a big surge of TV production in the U.S. It is true that if you make it attractive for more people to invest in the U.S., we may get some more factories. But we're going to pay the penalty in much higher prices and in a less efficient economy that over time, I think, will bring lower living standards.
INSKEEP: If we accept that some people are feeling pain now or will soon, could the pain get worse and more widespread as this trade war goes on?
WESSEL: Yes, it could. I mean, that's the nature of these tit-for-tat trade relationships. And it's no sign that this one is coming to an end anytime soon.
INSKEEP: David Wessel, thanks very much, really appreciate it.
WESSEL: You're welcome.
INSKEEP: David Wessel at the Brookings Institution.
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